Gold bond scheme gets response worth Rs246 cr

28 November 2015

The government said on Friday that its gold bond scheme got overwhelming response from retail investors with 63,000 applications amounting to Rs246 crore, while the gold monetisation scheme, which has so far witnessed a "slow response", has been tweaked.

On the gold bond scheme, a finance ministry statement said, "This scheme saw an overwhelming response from the investors throughout the country. Initial figures show that about 63,000 applications were received for a total of Rs246.20 crore by banks and post offices for 917 kg of gold."

The first tranche of Sovereign Gold Bond, which was issued by the Reserve Bank of India from 5-20 November through banks and post offices, saw "overwhelming response" from retail investors. As regards the gold monetisation scheme, the statement said that those depositing gold under the scheme would be exempt from Income Tax and Capital Gains Tax.

It said that after stakeholder consultation following "slow response" to this scheme, the government has taken seven decision to "improve the reach of the scheme". Gold depositors can also give their gold directly to the refiner without involving the collection and purity testing centres wherever it is acceptable to the banks. "This will encourage bulk depositors like HUFs and institutions to participate in the scheme," it said.

Also, to increase the awareness among depositors, the government will continue the campaign in print media, social media, radio and television. The Bureau of Indian Standards (BIS) has modified the licensing condition to refiners, which is likely to increase the number of licensed gold refiners to nearly 20. "BIS has invited applications from the more than 13,000 licensed jewellers to act as a Collection and Purity Testing Centres (CPTCs) in the scheme provided they have tie-up with BIS's licensed refiners," the statement added.

BIS is expected to complete the registration of 55 CPTCs by the end of December.

The finance ministry statement said fees to the banks on account of testing, transport, refining and storage services at CPTCs and refiners for medium and long term government deposits will be reimbursed based on the actuals.

"The above steps and the clarifications are expected to fetch a better response from the depositors," the statement added. Till 18 November, the gold monetisation scheme had garnered 400 gm of physical gold. The country has over 20,000 tonnes worth over Rs5,200,000 crore of idle gold with households and institutions.

The gold monetisation scheme aims to reduce the country's reliance on the import of gold to meet the domestic demand. At present, there are 33 CPTCs and 5 refiners that are notified under the scheme, the statement said, adding this had resulted into signing of limited number of tripartite agreements among banks, CPTCs and refiners. "After the slow response to this scheme, a meeting of all the stakeholders of the scheme was held in the Department of Economic Affairs. In the meeting, a number of decisions were taken to improve the reach of the scheme," it said.

The statement said both the bond and monetisation schemes are innovative schemes and these are early days of implementation. "Based on the feedback received from the stakeholders of the schemes, government will continuously monitor and review the progress of the schemes at the regular intervals and make necessary improvements, in order to increase the reach of the schemes," it said.

"The positive response to this new and innovative saving instrument has elicited response from across the country and it is expected that subsequent tranches will continue to receive such enthusiastic response," the finance ministry statement said.

Later, in a tweet, Das said the Gold Monetisation Scheme is open ended. "Too early to comment. Government proactively engaged with stakeholders. (We) will continue to review and improve," he tweeted.